Sensex climbs despite dismal GDP data

Indian markets closed with decent gains at the end of a choppy session, as investors hoped that the RBI will support growth going forward by pausing its aggressive monetary tightening.

For a change, the key indices managed to shrug off the political stalemate in parliament and the ongoing war of words on FDI in retail. Not only that, they also ignored the general weakness in the overseas markets and drop in the rupee versus the dollar.

The GDP data was the main highlight of the day. The markets sort of heaved a sigh of relief that Q2 economic growth didn’t come below estimates. India’s economy grew by 6.9%, the weakest in two years, and lower than 7.7% in Q1. India’s GDP growth in the year-ago period was at 8.4%. The Finance Minister and his chief economic advisor expressed disappointment as did Moody’s. But, the key indices still managed to advance modestly.



The BSE Sensex ended at 16,123, up 115 points over the previous close. It had earlier touched a day’s high of 16,179 and a day’s low of 15,849. It opened at 15,868.

The NSE Nifty finished at 4,832, up 27 points over the previous close. It earlier touched a day’s high of 4,851 and a day’s low of 4,754. It opened at 4,766.

The broader indices weren’t so lucky. They were in the red throughout the day, dragging the market breadth down. The BSE Small-Cap index and the BSE Mid-Cap index dropped ~0.7% each.

In terms of sectors, Oil & Gas and FMCG indices were the top winners today, rising by more than 1% each. Teck, IT, Power and PSU indices were the other notable gainers. Consumer Durables index was the biggest loser, down 2%. Realty, Auto and Banking indices lost 0.5% to 1%.

The market undercurrent remained jittery due to the ongoing political confrontation over the contentious issue of FDI in retail. The parliament was adjourned today for the seventh day as the opposition parties continued to attack the Government over the sensitive issue. The Congress Core Group discussed the issue but could not take any decision.

Not just from Opposition parties but also a few allies and some Congress leaders want the Government to reverse the decision. However, the Prime Minister and the Finance Minister both have indicated that the Government won't rollback the Cabinet move.

At the same time, the Centre may have to brace for another political storm; this time over the proposed Lokpal Bill. Anna Hazare is not happy with a draft and has threatened another agitation. In short, political developments are likely to hog the headlines in the short term.

Weakness in the Asian and European markets also partly affected the mood today.

Asian benchmarks closed lower after Standard & Poor's downgraded several lenders, including top US banks citing a change in its ratings criteria. The Chinese market was the top loser, down more than 3% while the Hang Seng in Hong Kong and the Taiex in Taiwan were down 1% each.

European stocks fell today as investors digested a downgrade of several global banks by Standard & Poor’s and fresh nervousness over the region’s debt crisis.

US markets closed mixed to flat on Tuesday. The Conference Board reported that its consumer-confidence index in November rose by the most in more than eight years.

FIIs continue to be net sellers while domestic funds are trying to counter that by buying in a weak market. Meanwhile, LIC has cut its investments for FY12 by a third to Rs. 400bn, from Rs. 600bn earlier.

Investors globally pulled out US$2.7bn from the emerging market focused funds during the week ended 23rd November amid concerns of the worsening debt crisis in Europe, global fund-tracking agency EPFR has said.

This was the biggest weekly outflow from emerging market equity funds since early October and has taken the total outflow from these funds since the beginning of 2011 to US$39.9bn, EPFR said.

Overall, the global equity funds saw a net outflows of US$15.6bn for the week ended 23rd November, taking the year-to-date total to over US$100bn mark.